Calgary (August 23, 2016) Alberta Party Opposition Leader Greg Clark says the lack of fiscal discipline shown by the Government puts Alberta at risk and is calling on the government to take swift action to avoid a fiscal crisis.

“Government policies are making a bad situation much worse,” said Clark. “Despite big corporate tax increases Alberta’s tax revenues are way down, and will continue to drop because the Government has done nothing to create a positive investment climate. In fact, they’ve done the opposite. Attacks on business like the PPA lawsuit scare off potential investors and send a message that Alberta is not a safe or stable place to invest.

“I call on the Government to move up the planned investor tax credit from January 1, 2017 to September 1, 2016, and to make it broad-based,” said Clark. “The delay rolling out the tax credit and the uncertainty over its’ scope has frozen capital. It’s one simple thing this Government can do to stimulate investment rather than scaring it off.”

Clark says the Ft. McMurray fires clearly played a part in Alberta’s record deficit, but says the Government’s lack of fiscal flexibility made the situation worse.

“Disasters like the Ft. McMurray fires are exactly why it’s important for governments to maintain a strong fiscal position – so Alberta doesn’t find itself in a tough spot when the unpredictable happens,” said Clark. “The Government’s decision making prior to this devastation was naïve and ineffective. I encourage the Government to rethink their budget process, and strive to find greater efficiencies within the public sector.”

Clark said the recent cancellation of the planned outsourcing of AHS laundry services is one of many examples of where the Government’s ideology trumps good fiscal discipline.

“This decision represents one-quarter of the $800 million increased deficit forecast in today’s fiscal update,” said Clark. “It’s a completely irresponsible decision given Alberta’s financial challenges.

“This fiscal update proves the Government’s lack of fiscal discipline will have significant repercussions for the people of Alberta for years to come, and I have significant concerns about the Government’s ability to solve the problems they have created.”

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For an interview please contact:

Natasha Soles

Communications Coordinator

Alberta Party Caucus

(780) 722-4733

Natasha.Soles@assembly.ab.ca

 

Backgrounder

2016 Fiscal Year Q1 Update

  • Income statement deficit increased by $527 million to $10.9 Billion
    • Revenue increases by $708 million
      • Mainly due to higher WTI price
      • Personal income tax revenue is $215 million higher than budgeted
      • Corporate income tax revenue is $877 million lower than budgeted
      • NRRR is $744 million more than budgeted
      • Transfers from the government of Canada increased by $652 million from budget
    • Expenses increased by $1.2 Billion
      • $816 million is for wood buffalo firefighting and DRP expenses
      • $100 million is increased health expense
        • Mainly due to higher volumes for benefits programs, and increased drug costs
  • Balance sheet
    • Net financial assets dropped $14.5 Billion from 2015 FY
      • This is a $474 million decline from 2016 budget
    • Total debt is now at $32 Billion (was $30.5 Billion at budget)
      • Debt-GDP ratio increases from 9.9% in budget to 10.2%
      • Total debt was $20 Billion for 2015 FY
  • Capital Plan
    • Total capital plan increases by $245 million
      • Mainly due to re-profiling of funds from previous year
  • Debt Servicing Costs
    • Increased by $37 million from budget
      • Mainly due to increased borrowing due to cash position
  • Contingency Account
    • Cash position has significantly weakened
    • This is leading to an increase in borrowing from $5.4 billion to $7.1 billion ($1.7 billion more)
      • Decrease of $850 million in cash from budget due to timing differences between accruals and cash collections
      • Loss of $695 million in cash that was to be transferred from previous fiscal year
  • Economic Indicators
    • WTI projection has increased from $42/bbl to $45/bbl (7%)
    • Differential has decreased from $15.20/bbl to $14.10/bbl (-7%)
    • Crude production has decreased from 524,000 bbl/day to 468,000 bbl/day (-11%)
    • Bitumen production has decreased from 2,668,000 bbl/day to 2,557,000 bbl/day (-4%)
    • Exchange rate projection has increased from 73.5 USD/CDN to 77.0 USD/CDN (4.8%)
    • GDP decreased by 1.6% nominally, 3.6 % in real terms (accounting for inflation)
    • Average weekly earnings dropped 2 percentage points
    • Primary household income dropped 1.6 percentage points
    • Net Corporate Operating Surplus dropped 8.8 percentage points

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